STOCK MARKETS — Falling gold price, dollar take their toll

A falling gold price coupled with a shaky Canadian dollar kept many market players on the sidelines, helping the Toronto Stock Exchange post a modest loss during the 4-day report period ended Jan. 3 (Canadian markets were closed on Jan. 2). The composite 300 index lost 7.33 points to close at 4,185.87.

The gold price fell sharply as fears over the Mexican currency crisis continued to mount and investors braced for additional hikes in U.S. interest rates. The London afternoon fix on Jan. 4 was set at US$375.60 per oz., down US$6.15 on the week. Despite a drop in the bullion price, the gold and precious metals index jumped 85.92 points to close at 9,265.58. At presstime, the Bank of Canada rate was expected to fall about 20 basis points from last week’s 2-year high of 7.43%. A drop in the bank rate would help relieve the pressure for an increase in the prime rate, which is currently at 8%.

The Canadian dollar, still under fire in the wake of the recent Mexican monetary crisis, fell to US71.14 cents, down more than a third of a cent on the week.

Senior gold producers continued to be mixed, with American Barrick Resources up 13 cents to $30.25; Echo Bay Mines off 25 cents to $14.38; Placer Dome up 25 cents to $29.25; and Hemlo Gold Mines, the big winner, gaining 75 cents to $13.88.

The Cuban exploration scene appears poised to heat up following Joutel Resources’ announcement that drilling on its La Zona Barita property had intersected high-grade gold mineralization. One hole yielded an impressive 10.7 grams gold per tonne over 26 metres, which included a 10.6-metre interval grading 24.3 grams.

Joutel shares lost 3 cents on the week to close at 41 cents. Fellow Cuban explorer CaribGold Resources added a nickel to $2.20.

Trillion Resources continues to expand its African holdings through a share in Vancouver-listed Oliver Gold. Trillion recently acquired 910,000 Oliver shares, bringing its total interest in Oliver to 1.4 million shares and 450,000 share purchase warrants. Oliver is earning a half interest in the Segala gold property in Mali. Shares of Trillion were up 30 cents to close at $4.85.

Newly listed Santa Elina Gold was an active trader, with more than 1.2 million shares changing hands. Talk on the street was that senior base metal producer Rio Algom had acquired a minor interest in the company. Santa Elina is exploring for and developing gold and base metal deposits in Brazil, Bolivia and Chile. The company has signed an agreement-in-principle with Echo Bay Mines concerning the junior’s Sao Vicente gold property in the Brazil; the property has a minable reserve of 4.4 million tonnes averaging 1.73 grams. Shares of Santa Elina closed unchanged at $2.10.

News of a drill intersection reportedly containing disseminated to semi-massive pyrrhotite, pentlandite and chalcopyrite failed to spark investor interest in Diamond Fields Resources’ Voisey Bay project in Labrador. The stock closed unchanged at $13.

Vancouver-based Manhattan Minerals announced it would proceed with the development of the Moris heap-leach gold mine in Mexico’s Chihuahua state, following the arrangement of a US$7.5-million line of credit. Manhattan shares added 10 cents to end at $1.50.

Latin American producer Greenstone Resources has paid off a US$5-million promissory note, part of which was used to buy its newest producing mine in Panama, the Santa Rosa. About 36,500 tonnes of ore have been stockpiled and are expected to yield 400,000 grams (1,300 oz.) gold. Greenstone shares hit a new 52-week low of $1.50 before edging back to end at $1.55, down 15 cents. The Murgor Resources discovery in northern Quebec continues to be hot news. The latest player to enter the fray is Freewest Resources Canada. The Montreal-based junior announced that it had signed an agreement to earn a 60% interest in 18 claims in Barry Twp. from Orient Resources. Freewest was a big trader on the week, gaining 8 cents to 82 cents on a volume of slightly more than 1.3 million shares, while Orient gained 7 cents to close at 24 cents.